Real Good Food raises £15.5m, outlines expansion plan
Source - SMW
Real Good Food has raised a total of £15.5m of expansion capital from a new investor and two existing shareholders by way of both debt finance and new equity.
This new injection of capital would be raised via a secured loan note instrument of up to £8.75m,from funds managed and controlled by Downing LLP.
The loan notes were redeemable in full after three years.
In addition to subscribing for the loan notes, funds managed and controlled by Downing have committed to subscribe for shares in Real Good Food of 10% of the issued share capital at a price of 35p per share raising a further £2.75m (together, Expansion Capital).
The company had also secured two £2.0m secured one-year term loan facilities from existing shareholders, Napier Brown Holdings Ltd and Omnicane Ltd in order to maintain an appropriate level of working capital in the business.
In order to achieve its 2018 budget, and also to take advantage of further growth opportunities, Real Good Food had decided to embark upon an expansion plan at two of its subsidiary companies, Renshaw and Haydens.
The two main areas of investment were at Renshaw's Crown Street site in Liverpool and Haydens in Devizes.
"Both these businesses are seeing significant increases in forward demand; this has been driven by international expansion and the launch of a mainstream retail brand at Renshaw and the acquisition of two major new retail customers at Haydens."
Both of these investments, as well as increasing capacity, brought significant benefits in efficiency, upskilling the workforce and mitigating the impact of the forthcoming Living Wage increases.
"The majority of the Expansion Plan is expected to be completed by the end of September 2017 and is budgeted to cost approximately £15m in aggregate, with the additional capacity provided by the Expansion Plan expected to commence delivering significant financial returns from the financial year commencing 1 April 2018."